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If a bank has a leverage ratio of 0.1 and a return on capital of 2%, what is its return on equity? A) 0.2% B) 2.1% C) 5% D) 20%

If a bank has a leverage ratio of 0.1 and a return on capital of 2%, what is its return on equity? A) 0.2% B) 2.1% C) 5% D) 20%

Financial Management: Theory & Practice
Financial Management: Theory & Practice
16th Edition
ISBN:9781337909730
Author:Brigham
Publisher:Brigham
Chapter15: Capital Structure Decisions
Section: Chapter Questions
Problem 5MC: What happens to ROE for Firm U and Firm L if EBIT falls to $1,600? What happens if EBIT falls to...
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general accounting
If a bank has a leverage ratio of 0.1 and a return on capital of 2%, what is its return on equity? A) 0.2% B) 2.1% C) 5% D) 20%
Transcribed Image Text:If a bank has a leverage ratio of 0.1 and a return on capital of 2%, what is its return on equity? A) 0.2% B) 2.1% C) 5% D) 20%
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